Transferring investments gets easier

Dec 3, 2004, 12.01am IST

Nomination is an integral part of the saving and investment process. In fact, it is an essential procedural step to be complied with in order to ensure a hassle-free transfer of investments to the near and dear ones.

Simply stated, in case of nomination, a person specifies who will be entitled to his investments in case of his death.

Nomination is an essential requirement, especially for the small investor, and it can be made for any investment like bank or post office deposits, shares, NSCs, insurance policies, PPFs, etc. It can be made at the time of making the investment, placing the deposit, or at any other point in time.

Further, depending on the circumstances, an investor can always cancel or change the nomination at any point in time. A nomination can be made irrespective of the amount of investment. However, there can be only one nominee.

In the event that one does not have a nominee, legally the immediate family will be entitled to get the money. However, this would require a lot of legal procedures to be complied with. Thus, a small compliance with the procedural formality can go a long way for the survivors and save them from hardships.

In case of direct equity investing, the investor should ensure that in case of any emergency, his wealth is transferred seamlessly to his near and dear.

Under Section 109A of the Companies Act, any shareholder or debenture holder, could, at any time, nominate a person to whom the shares or debentures would vest in the event of his/her death in the manner laid out in the Act.

In case more than one person holds the shares/debentures, the joint holders could together nominate such person. The nominee can be any person, related or unrelated, and even a minor can be appointed as a nominee. A simple nomination procedure is required to be followed.

The investor needs to fill up a nomination form in a prescribed manner. For equity shares, the nomination is in Form 2-B (in duplicate), to the registrars and share transfer agents of the company.

In case of equity shares, if the nominee elects to become the registered holder, he has to send a notice in writing to the company and send the death certificate along with the share certificates. In case he elects to transfer, he has to send the transfer deed also, duly signed by him as transferor.

In case of demat accounts, the investor can specify the nominee at the time of opening of the account.

This way the investor does not need to inform the nominee details to each of the companies whose shares he is holding. In case he wants to cancel or vary the nomination, only the depository participant needs to be informed.

Further, in case of the death of the investor, the nominee can just approach the depository participant, fill up the requisite forms and the entire shareholding of the investor will be transferred to the nominee.

Similarly, while opening of bank or post office account, one must fill up the nomination forms and ensure that the necessary endorsements are done in the pass books/bank records.

In order to claim the amounts due under the investments, the nominee has to produce identification proof like ration card, passport, election card, PAN card, etc to the company, along with the other requisite documents.